Insulation industry news from Global Insulation

Ireland: Kingspan has earmarked Euro20m for its initial expansion into Mexico, which it expects to enter in 2016 or 2017, according to chief executive Gene Murtagh. The greenfield expansion was confirmed by the group as it posted record first-half results, boosted by acquisitions and favourable foreign exchange movements.

Revenue rose by 39% to Euro1.24bn, while its trading profits jumped by 61% to Euro112m. Excluding currency benefits, revenue was 29% higher, while trading profits were up by 44% on the same basis. Kingspan reported that its overall performance was underpinned by strengthening UK and US markets, while there has also been recovery in other important markets for the group, such as the Netherlands.

Kingspan completed two significant acquisitions so far in 2015: the Euro320m purchase of Belgian group Joris Ide and the Euro139m purchase of Canada's Vicwest. The company also plans to install new insulated panel manufacturing capacity at plants in Belgium, France and Russia over the next two years.

Murtagh said that Kingspan has allocated Euro75 - 80m/yr for capital spending over the next four to five years, which includes the start-up costs for its entry to Mexico. "There were some bolt-on opportunities in Mexico but we haven't managed to unlock any of those, said Murtagh. "The investment at the start will be in the order of Euro20m. Naturally, over time that becomes larger as we expand the business."

Kingspan has also continued to eye opportunities in Brazil. "We haven't made any significant headway, but it's still very much in our thinking," added Murtagh. "Our ambition in Brazil would be to do it through an existing player and that just takes a bit of patience."

US: Installed Building Products (IBP) has acquired Eastern Contractor Services based in New Jersey, which also operates as Parker Insulation and Building Products in Nederland, Texas, according to Dow Jones.

Eastern is a well-established company with locations in Flanders and Tuckerton, New Jersey, with a primary focus on fibreglass and spray foam insulation installations. Parker's product offerings include fibreglass and spray foam insulation as well as garage doors and other complementary products, in the south-eastern Texas market. Both Eastern and Parker focus on new single-family and multi-family residential construction end markets.

"We are pleased to announce our sixth acquisition of 2015 with trailing twelve month sales of approximately US$23m," said Jeff Edwards, chairman and CEO. "We have created a compelling acquisition platform and these established branch locations will deepen our presence in New Jersey, the New York metropolitan area and Texas. This acquisition brings our total acquired revenue in 2015 to approximately US$85m as we continue to pursue excellent acquisition opportunities in our target markets. We remain confident in our ability to execute on our growth strategy of utilising a disciplined approach to valuations and pricing."

US: Engineered thermal solution providers Thermon Group Holdings Inc has announced that one of its wholly-owned, indirect subsidiaries, Thermon, has acquired 100% of the equity interests of Industrial Process Insulators Inc (IPI) for US$21.75m, effective from 31 July 2015, according to Dow Jones.

IPI is an insulation contractor serving the refining, petrochemical, power and energy, marine and pulp and paper industries in the US, with a significant presence in the Texas and Louisiana Gulf Coast region. For the unaudited 12 month period that ended on 30 June 2015, IPI generated around a revenue of around US$22m. The IPI management team, led by Darrell Kunk and Brian Kunk, will continue to operate the business following the closing of the transaction.

"For over 15 years, IPI has been delivering high quality, responsive and, most importantly, safe, thermal insulation solutions to its industrial customers in the Gulf Coast region, including as a subcontractor of Thermon. We believe that IPI is an ideal complement to Thermon's existing installation services offering and will enhance our ability to execute turnkey heat tracing solutions. We expect the acquisition of IPI to enhance our ability to sell our core heat tracing products and grow our installed base. The acquisition is consistent with our strategy of pursuing organic and inorganic growth opportunities within and adjacent to our core thermal solutions business," said Rodney Bingham, president and CEO of Thermon. "We have known and worked with Darrell and Brian Kunk since the early 1990s and are pleased that they have agreed to multi-year employment agreements with Thermon. We look forward to welcoming IPI employees into the Thermon family."

"We have a great deal of respect for the Thermon organisation given the long track record of involvement between our two companies. We are excited to be partnering with Thermon and look forward to continued success," said Darrell Kunk, CEO of IPI.

US: Installed Building Products (IBP) has announced strong results with growth in net revenue, adjusted earnings before income, taxes, depreciation and amortisation (EBITDA) and operating income for the second quarter of 2015, which ended on 30 June 2015.

For the second quarter of 2015, net revenue grew by 26.4% year-on-year to US$159.7m. On a same branch basis, net revenue improved by 10%, with approximately half of the growth attributable to an increase in the number of completed jobs and the remainder through price gains and a 'more favourable customer and product mix.' Gross profit improved by 33% to US$46.3m and gross margin expanded to 29% from 27.6%, primarily due to favourable leverage on higher net revenue and increased cost efficiencies. Adjusted EBITDA grew by 77.4%year-on-year to US$17.7m, largely due to higher net revenue and improvements in gross margin. Operating income grew by 148.5% to US$11.4m. Adjusted net income from continuing operations was US$7.2m compared to US$3.5m in the same quarter of 2014.

"The second quarter reflects further momentum of our business strategy, which produced another quarter of year-on-year growth in net revenue, same branch sales and profitability," said Jeff Edwards, chairman and CEO. "Our financial results are benefitting from continued improvements in the housing market, as well as the strong local market performance of our branches. Our core single family same branch sales outperformed the growth in single family residential completions during the second quarter and we expect this trend will continue. I am very pleased with our acquisition strategy, pipeline, integration and performance. IBP has built an exciting platform that offers a compelling option for local builders. During 2015, we have already acquired US$63m of annual revenues and these acquisitions are quickly contributing to both revenues and earnings. Our capital position remains strong and we have a robust pipeline of potential acquisitions for the remainder of 2015 and through 2016. We expect positive momentum to continue throughout the remainder of the year as we continue to benefit from improving residential end markets."

US: Owens Corning has reported that in the second quarter of 2015, its revenue rose by 4.4% to US$1.42bn. It expects to benefit in 2015 from sustained improvement in the US housing market and moderate global growth.

In the composites sector, the company now expects a full-year earnings before income and taxes (EBIT) improvement of about US$60m based on current volume and pricing strength, including the impact of US$25m in currency headwinds. In roofing, Owens Corning continues to expect that the full-year US shingle market will be in line with 2014. Based on the decline in first-half shipments, the market is expected to grow by the mid-single digits in the second half of 2015. Insulation should continue to benefit from growth in US residential new construction, improved pricing and operating leverage. The company has estimated an effective tax rate of 30 – 32% and a cash tax rate of 10 - 12% on adjusted pre-tax earnings, due to the company's US$2.2bn tax net operating loss carry-forward. Owens Corning expects general corporate expenses to be at the bottom of the range of US$120 – 130m in 2015 and capital expenditures of approximately US$380m. Interest expenses are expected to be about US$110m.